This time of year is when Morningstar releases the annual review
of managed funds performance and compares it to the market.
However, in this month's feature article, we take a slightly
different look at these numbers and compare the returns that were
reported by the funds with those that the investor actually
receives. Whilst that sentence may sound strange with hidden fees
or the like inferred, the answer is actually quite simple - the
problem is the investor!
In his article titled
"Investors' miscues sap returns – again",
John Waggoner notes that "the average investor's return
has lagged the average fund's return by 2.49 percentage points
a year with the typical investor gaining 4.8% a year for the 10
years ended December 2013, vs. 7.3% for the typical fund". The
reason for this is that investors try to time the market rather
than focusing on the long term time IN the market.
This is what is often referred to as "the behaviour
gap" and as Carl Richards writes in the
New York Times, we are still making the same old mistakes. He
notes that "Most people buy and sell. We hunt for the next
rock star mutual fund manager and follow our brother-in-law's
tips at the family barbecue. In fact, as Nate Silver points out in
his book "The Signal and the Noise", the
hold times for stocks have declined every decade until the
2000s. Today, we hold our stock investments for about six
months. We're clearly not what anyone would think of as long
Our Director of Wealth Management, Daniel Minihan, recently
wrote a piece on
Long Term Investing (drawing some parallels with Hulk Hogan of
all people!) which included some analysis on the long term returns
of Australian and International shares over a 30 year period. This
analysis is predicated on an investor staying true to the course,
despite all the ups and downs, which from the recent data and the
articles above is not assured.
An actuarial review of the Invensys Australia Superannuation Fund showed it to be in surplus to the tune of $189.2 million. In mid 2003, the Invensys Group proposed to the trustee that the surplus be repatriated to the principal employer in the group.
Lenders in New South Wales breathed a sigh of relief earlier this month when the Supreme Court ruled in Bank of Western Australia Ltd v. Primanzon  NSWSC 862 that two part-time commercial property investors could not claim relief under the Contracts Review Act 1980 (NSW) because the loans advanced to them were entered into in the course of a trade, business or profession carried on by them.
A key aspect of an innovation culture is keeping it active at all levels of management, from teams to board meetings.
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